Finalisation of the acquisition is expected by January 31, before White Energy shareholders vote on the transaction, probably in March.

Cascade's Mt Penny coal project is located 60 kilometres north-east of Mudgee, and is linked to the Newcastle port by a 235 kilometre rail line.

"The proposed acquisition of Casade represents a unique opportunity for White Energy to own a high quality thermal coal asset, with significant reserves and good accessibility to transport infrastructure, located in the well established coal fields of New South Wales," White Energy said in a statement.

Of the 173.7 million tonnes of coal resource at Mt Penny, 102.6 million tonnes have been classified as probable reserves.

It is expected to produce up to 3.8 million tonnes of export quality coal per annum, with first production expected in 2013.

By 2018 annual production is expected to reach 6.5 million tonnes.

White Energy said a maximum of $41 million worth of the transaction will be paid in cash.

The transaction will be funded completely out of current cash reserves, and there is no prospect of raising capital, White Energy said.